The decision of the Harvard University endowment fund to trim your bitcoin holdings while adding exposure to ether (ETH) has raised a familiar question: is the endowment making a bet on Ethereum over Bitcoin, or simply adjusting for risk?
The answer may be less dramatic than it seems and potentially bullish for the sector.
Michael Markov, co-founder and president of Markov Processes International, which studies university endowments, said cryptocurrencies are probably the most volatile part of Harvard’s public markets portfolio. In Q4 2025, price swings in both bitcoin and ether increased, with both assets losing around 25% of their value.
These sharp price swings have, at least in part, led Harvard to rebalance its portfolio, even if it did not change its long-term view of bitcoin. When an asset becomes more volatile and risky than anticipated in a portfolio, trimming it restores balance.
“When volatility increases sharply, that sleeve’s risk contribution can expand disproportionately relative to its capital weight,” Markov said. In that context, he added, exposure can be cut “without implying a strategic change.”
Simply put, Harvard, which bought BlackRock’s bitcoin ETFs last year, probably hasn’t lost its conviction in bitcoin; rather, it took steps to rebalance its risk appetite.
In fact, it is not just a cryptocurrency-specific movement. Rebalancing capital from assets that have performed well to underperforming sectors is something most Wall Street portfolio managers do to keep returns flat. The idea is to rebalance the portfolio before a market rotation, moving better-performing assets toward worse-performing ones to capture an eventual shift in sentiment.
For example, given the sky-high valuations of traditional stocks, some of these endowments, which tend to focus on long-term performance, have begun to look at other alternative investment ideas, including digital asset-related ETFs. Harvard first purchased bitcoin in the third quarter of 2025, allocating approximately 20% of its US-listed public stock holdings to the crypto asset. The idea is not to overhaul portfolios, but to add measured exposure that could boost returns in years when cryptocurrencies or underperforming assets do well and traditional stocks start to lose their higher valuations.
Another possibility is liquidity.
Harvard has increased its allocation to private equity in recent years, Markov noted, investing more capital in long-term illiquid investments. At the same time, billions of dollars in unfunded commitments remain on the books. That creates pressure on the smaller portion of the portfolio that can be sold quickly.
“That means the liquidity coverage is relatively small compared to the capital call obligations,” he said. When that happens, and investors like Harvard need to fund private equity capital investment requests, they tend to sell more liquid publicly traded assets to meet those commitments.
“Selling some public ETFs, including crypto ETFs, is mechanically the easiest way to manage that pressure,” according to Markov.
Cryptocurrency demand
Despite the need to rebalance volatile assets or fund other capital commitments, Harvard did not abandon cryptocurrencies.
Instead, it added nearly 3.9 million shares of the BlackRock Ether ETF, currently valued at $56.6 million.
Samir Kerbage, chief investment officer at Hashdex, sees that move as part of a broader institutional shift toward digital assets and beyond simply investing in bitcoin.
“Harvard’s purchase of Ethereum ETFs is a clear sign of institutional demand for cryptoassets beyond bitcoin,” Kerbage said. He pointed to the GENIUS Act, passed in July, which makes it easier for large allocators to navigate the crypto landscape.
As the rules around stablecoins and tokenized securities take more shape, investment committees at large institutions may feel more comfortable supporting networks that support those applications.
Ethereum is at the center of much of that activity. In recent years, it has become the leading network for stablecoins, tokenized funds, and other on-chain financial applications used by asset managers and fintech companies. Unlike bitcoin, it offers institutional-level staking, allowing holders to lock tokens to help secure the network and gain yield. That feature may make ether look less like a pure directional play and more like an exposure to the underlying infrastructure that powers digital financial services.
Kerbage also expects institutions moving beyond bitcoin to favor diversified products, but slowly. While some allocators may consider assets like ether, XRP, or solana (SOL) on their own, he said many will likely choose index-style vehicles.
“This current trend is not because it is the hot option, but because the alternatives are really difficult,” Kerbage said, citing questions such as which tokens to hold, how much to allocate, and when to rebalance. “These are not cryptocurrency-specific problems.”
However, for a giant fund like Harvard, indicating a desire to expand further into digital assets, even if slowly, is probably a positive for cryptocurrencies, as even a few years ago, this was unthinkable.
Taken together, Harvard’s bitcoin drawdown and ether purchase may reflect two things: managing near-term risk and cash needs, while slowly expanding beyond bitcoin as U.S. crypto rules become clearer. Ultimately, it is likely a broader sign of increased institutional confidence in digital assets.
